Labor, Big Business Prep for Next Showdown

Posted June 4, 2010 at 4:50pm

Democratic lawmakers are pushing the White House to force federal contractors to pay their employees a “living wage,” setting the stage for another summertime showdown between organized labor, government watchdog organizations and the business community.

As Members fled Capitol Hill for the Memorial Day recess, Rep. Elijah Cummings (D-Md.) and 21 of his colleagues fired off a letter to President Barack Obama, encouraging him to sign an executive order that would enact wage requirements and other “high road” contract requirements for companies that do business with the federal government.

“There is a pressing need for this measure,” Cummings wrote on May 28. “The Economic Policy Institute estimates that there were 2 million federal contract workers in 2006; nearly 20 percent of these contract workers earn less than the poverty threshold wage of $9.91 per hour, and 40 percent earn less than a livable wage.”

“Not only are such conditions bad for workers, but they are also bad for taxpayers,” he continued. “Taxpayers pay for the hidden costs of poverty wages through Medicaid and other programs and, when workers are poorly treated, taxpayers often receive lower quality work.”

The letter was also signed by New Democrat Coalition Reps. Bill Foster (Ill.), Rush Holt (N.J.), Christopher Murphy (Conn.), Laura Richardson (Calif.) and Patrick Murphy (Pa.), who is also a member of the fiscally conservative Blue Dog Coalition.

The White House press office did not respond to a request for comment about the proposed executive order. Still, Cummings and his colleagues hinted in the letter that the proposal, which first emerged earlier this year, could be revived this summer — much to the delight of labor groups such as the Service Employees International Union.

“There are a lot of priorities for workers right now who are struggling,” SEIU spokeswoman Lori Lodes said. “High road contracting is important to try and rebuild the middle class, and there are other priorities that we have that have a similar end goal: create more good jobs.”

Exact details of the proposed executive order are unclear. But according to a purported draft provided to Roll Call and distributed by the White House late last year, the administration’s goal is to bulk up the federal salary requirements for contractors to “promote President Obama’s agenda to create good jobs and expand the middle class.”

“Federal contracting has ballooned since the beginning of the Bush administration: goods and services contracting totaled over $500 billion in 2008, more than double the level in 2000 and equal to over three percent of the total U.S. economy,” the memo states.

The executive order would also blacklist contractors who have been cited for environmental, tax and other violations, according to the memo. The left-leaning Center for American Progress Action Fund on Thursday suggested that such a policy may have prevented BP’s massive ongoing oil spill in the Gulf of Mexico.

“The ‘high road’ contracting proposal supported by the Center for American Progress Action Fund would ensure that the government has the power and information it needs to avoid doing business with irresponsible companies in order to prevent tragedies like the BP oil gusher from happening again,” a June 3 report by the group reads. “Well before the explosion on the Deepwater Horizon oil drilling rig in the Gulf of Mexico, BP had a long history of lawbreaking that should have warned the federal government to refrain from entering into risky deals with the company.”

SEIU and the Center for American Progress are also part of a loose coalition of advocacy and legal organizations calling for Obama to sign the executive order. Gary Therkildsen, federal fiscal policy analyst with OMB Watch, said his group supports the high road requirements. He said the new rules would upend the current guidelines that promote lower wages for employees of federal contractors.

“If they’re an upstanding contractor that does right by its employees with high road contracting policy, they’d be more likely to get a contract,” Therkildsen said. “For those that fight for social equity, that’s the idea behind the whole thing.”

Proponents of stricter guidelines for contractors and higher wages for employees face staunch opposition from the business community and Senate Republicans.

With contentious “card check” legislation dormant for now, the U.S. Chamber of Commerce is warning its members that the looming White House plan will also have enormous negative consequences for their balance sheets.

“A number of our members do government contracting, and they would certainly face higher labor costs if they’re forced to apply these hyperminimum wages to their entire work force,” said Glenn Spencer, the executive director of the chamber’s Workforce Freedom Initiative.

Earlier this year, Sens. Scott Brown (Mass.), Susan Collins (Maine), Tom Coburn (Okla.) and other Republican Senators in multiple letters lodged their concerns with Office of Management and Budget Director Peter Orszag about the proposal.

Spencer also said that he continues to hammer the high road contracting proposal when he’s out on the road giving speeches to chamber members trying to explain it in terms business leaders understand.

“The hyperminimum wage that you’d be forced to pay everybody? People get that pretty quickly,” he said.